Quantitative easing alone will not ward off deflation

The ECB embarked on a programme of quantitative easing (QE), as very low inflation posed a mounting threat to the economic stability of the eurozone. However, if the ECB were to combine unlimited QE with a temporary price-level target – 2 per cent on average for five years – it could stimulate the economy and inflation, while remaining true to its mandate of price stability close to 2 per cent. Such a temporary price-level target would be new territory for the ECB, as would QE.

ESO: Background information: The ECB's Expanded Asset Purchase Programme. Will quantitative easing revive the euro area economy? http://www.europeansources.info/record/the-ecbs-expanded-asset-purchase-programme-will-quantitative-easing-revive-the-euro-area-economy/

ESO: Background information: ECB announces expanded asset purchase programme http://www.europeansources.info/record/ecb-announces-expanded-asset-purchase-programme/

---